Templar Real Estate Radio Show Transcript 9-26-2020

Learn about Real Estate by one of the premier Real Estate Investors in New Jersey. Each week Joseph J. Zoppi will be talking about investing in real estate including buying and selling houses and apartments. Understand how the economy, the Fed and world events impact real estate and how to adjust to these dynamics.

Templar Real Estate Radio Show for September 26, 2020

START OF RECORDING

The following program was paid for by Templar Real Estate. The views and opinions expressed on this program are not necessarily those of the staff and management of WMTR.  As always, it is advisable to consult a professional before making a major decision.

It’s time now for the Templar Real Estate Talk Show. Here’s your host for the program, Joseph J. Zoppi.

Joseph J. Zoppi:

Hi, welcome to the Templar Real Estate Talk Show, my name is Joseph J. Zoppi, a real estate investor, consumer advocate, author, and managing partner of Templar Real Estate Enterprises. You could reach us at templarcashforhouses.com, that’s T-E-M-P-L-A-Rcashforhouses.com, it’s one word, or you could call us at 973-240-8593. Again, that’s 973-240-8593 and we could answer any questions you may have or you could email us from our website. We could discuss any topics that you want to hear on the show or any other questions you may have about real estate.

My company is a real estate investment firm, we buy houses for cash, we purchase apartment buildings, we do joint ventures with other real estate investors, we loan money for rehabs and provide transactional or gap funding. We work with individuals that want to invest with us in single-family houses up to apartment buildings too. We do not speculate, we’re very protective of our money and our investors’ money. I am not a real estate agent. I have individuals on staff that are agents that will sell your house through the traditional Multiple Listing Service. We’re also not a brokerage, okay?

This show will go through everything that is about real estate, those things that impact real estate. We’ll talk about our rehabs, some of our investments, what went well, what did not, and especially how we learned from it. We’ll talk about the economy and interest rates, and we’ll discuss trends in the real estate market. Real estate is one of your biggest investments, so it’s important that you know as much as possible about it.

What I’m providing here is my opinion and my experiences. I ask everyone to do a lot of research, look on the Internet, and make sure that you do a balanced analysis. As I always say, when you read an article or you read some information, it’s not usually a neutral position. It’s usually slanted towards one direction or the other, so make sure you double, triple check everything to ensure that you are getting as much as possible the accuracy.

I was interviewed two weeks ago or a week ago and for US News and World Report and I had an article published where I was quoted in there that was on September 16 for reverse mortgages. With that being said, I had another one on September 20 called Reverse Mortgage Daily and it had to do with things to consider before getting a reverse mortgage. So you could always see that if you go on my website and you can see the different articles that I’ve been interviewed for, I’ve been interviewed for Forbes, FOXNews, a number of other, US News and World Report, so I’ve been interviewed by a lot of different news organizations. I had an interview this week, we will see if it’s published, for Commercial Real Estate and where it was before the pandemic and after the pandemic, and what’s going to happen in the future, and I’ll talk a little bit about that later on.

I want to say hello to one of my favorite listeners, Paulette. Hello, Paulette, hopefully, everything is going well for you. We are having a lot of private discussions. Everything we do is private and we do not give this information out, we are very, very protective of our clients and the information they give to us. Anything I discuss on the show is more towards what we’ve done or indirectly on some of the experiences we’ve had with some individuals we worked with, but we are very, very protective of all the information that we receive from our potential client or clients.

If you need to sell your house quick, please give us a call, we could purchase it for cash, we could also list it with the Multiple Listing Service, and we’ve been extremely successful with both of those. Sometimes, you have a house, even in this strong market, that really is going to have a challenge selling. That could be because of a lot of repairs that need to be done, you might not want an agent or one of our agents to come through the house and continually have strangers walking through and trying to keep your place neat, and so on and so forth, so obviously, we could just buy your house as is and we accept everything in terms of the deficiencies with the house and all the problems associated with it. It’s all in us, so you don’t have to worry about getting CEOs, certificate of occupancy’s, and all those things that are associated with it, so it makes life considerably easier under certain circumstances, especially for inherited houses that you’re not living in, those houses that are called hoarder’s houses and those houses that just have some structural foundation issues, structural issues, things like that. Those types of houses will not be underwritten by regular mortgage companies, so the only really other alternative is either fix it yourself or sell it to a cash buyer.

We are also looking for investment properties, if you have anything, please give us a call, we are always very interested and hungry for investment properties, especially larger investment properties, preferably 200 units or higher. We will do smaller ones but that’s where we really like to stay, is 200 and above, but yeah, we’ll do something as small as 20 units. Sometimes, even 10, so if you have anything, please give us a call, doesn’t matter where it’s located, it doesn’t matter the state, except for California and New York, so those are the two states right now we are really shying away from, but we love Pennsylvania, Ohio, Iowa, Texas, we love, and throughout the United States, but we are staying away from California because of all the regulations as well as New York.

Also, if you know someone that needs to sell their house for cash or has an investment property, we will provide a finder’s fee, generous finder’s fee and you just give us a call, again, will be very private with your information if you want us to be, so we have no problems with that.

So, I’m going to talk about a couple things that’s happened over the past week, and one of them had to do with a house that we are selling in New Milford. I’ve talked about it as the progress went from issues with fixing it all the way through contract, so we had the house listed at $539,000, it was extremely high, we priced it very, very high, so we knew that was excessive but we did get someone that wanted to buy it at that price. Eventually, it fell through, the woman was a first-time homebuyer and she was scared off by the inspection report which is really very minor, but because she was a first-time homebuyer, she just, she got scared. She expected the inspection report would have nothing on it and as I always say, all inspection reports are going to have issues. An inspector is not going to say no, the house doesn’t have any problems because people are going to say, “Well, then, you didn’t do your job if you can’t find any problems.” So they’ll find very little issues, sometimes, they’ll find big problems. We always know that there’s going to be some issues with our houses – we are not perfect, there is no house that’s perfect, even brand-new build houses are not perfect, so there’s always issues, and we could spend $100,000 on a rehab and you could always still spend more money on a rehab for things that are not correct and we have to balance out what’s good and what’s bad, and how much we get the bang for the buck.

So we had a few issues with this house for things that we did not do, the garage didn’t have a lock on it for the garage door, there was a door that was not a fire door which should’ve been put in and we will put that in because we knew about that. There was also a couple outlets down in the basement that were put in for washer and dryer, so those are some of the things, nothing really major, but we expected some issues and sometimes, it’s a balancing act and that’s what we do, but the house was very pristine, really nice, well done, hardwood floors, granite or it was quartz countertops, so it was just a beautifully well done house and we’ve got so many compliments from builders and agents on the quality and that’s one of the things that we drive on, is really the quality. We are very fanatical about that.

So what we did is after one contract did not go through, we lowered the price by $10,000 and we still knew it was going to be still very high and it was at $529,000, basically, so we had two offers on it and as I said before, what we did is we wanted to have certain bonuses we always do for the buyers agent. One of them is if we get full asking or above, we will give $2000 and if it’s under contract usually within the first month, we will give another $500. Now, a lot of individuals do not give those bonuses, this is just a straight number, we don’t believe in that. One of the things that we do, and I consistently say is we are trying to drive behavior, we are trying to drive behavior of the buyer when they see the house and they go, “Wow, I want this house because it’s one of the nicest or the nicest on the market in the area,” so we are driving on that. The other thing we want to drive on from a behavior perspective is for agents to be incentivized to push and navigate the seller towards a higher price, it’s just, that’s the way it is, and a lot of times, there’s multiple offers coming in, so it just makes it easier.

So with that being said, we had a bonus in there and we had a couple individuals that wanted to buy the house, and we went back-and-forth a couple times, we do not like bidding wars per se, the reason is that we put a price in there and that’s the price we would like. We are not into going back-and-forth a lot, that’s just not us, and for clients, we’ll do that and we should do that but for us, we pick a price, we know our profit margin, and we take it from there. One of the things that you get into a bidding war that it might not appraise for what it should, and then you have an issue.

Well, I’m coming out on a closeout on the segment and I’ll continue this in a minute but again, you could reach us at 973-240-8593 or templarcashforhouses.com. So I’ll be back in a couple minutes and we will continue with this, thank you.

Joseph J. Zoppi:

Hello, welcome back to the Templar Real Estate Talk Show. My name is Joseph J. Zoppi, managing partner of Templar Real Estate Enterprises. You could reach us at 973-240-8593 or templarcashforhouses.com, that’s T-E-M-P-L-A-Rcashforhouses.com, that’s one word.

So as I was saying in the last segment, we are trying to influence behavior. One of the things that we like to do is have a great house. If you see a nice house that you want to buy, the emotions around it, you want it, and again, there are couple of things behind that is that you going to a house, it looks like it’s brand-new and you don’t have to pay for a brand-new house, so that’s all good stuff and the quality of the workmanship and all those things associated with it really garnered that extra money that you’re going to spend on it, so those are all good things and you move in, it’s move-in ready, the quality is there, we back everything in terms of the quality, so we influence the behavior that way and we also influence the behavior on the broker side or the agent side that they have different incentives to drive the price where we would like it. With that being said, we had a couple offers on it and we took an offer that was $6000 over our list price. That was the adjusted list price of $529,000, so we came in at $535,000. Now, one of the things that we were not concerned about was really the inspection. We knew, again, the quality was good, we already had our previous inspection by another company and they found minor things and we knew about most of those minor things. When we went under contract, one of the things we said is that we want the appraisal done first. Traditionally, after you come out of attorney review, you do the inspections then the appraisal because things might go sideways on the inspection, well, we spoke to the agent and he says, “If we are going to go under contract, we want the appraisal done first and the reason for that is the appraisal and the process behind it takes two or three weeks.” We took the house off the market and you could see it within Zillow that it went off the market and it went off once already with the original person that wanted to purchase the property. Because of that, there is always that question: what happened? Was there a problem with the inspection? That’s the first thing they think, they don’t think anything else, they just think it’s based on the inspection and there really were no issues with the inspection but there’s always that, what’s going on? Is there a structural issue problem? There’s some hidden problem, so we are always concerned when we go under contract if we have to take out of the contract and back on the market because it always lends to those questions.

With that, we wanted to make sure that if we did have to put it on the market, we want to put it back on the market quickly. The other reason is that the individuals that had a backup offer, we could’ve always went to them, but in this market, we don’t want it to last three weeks, four weeks, and then try to go back to them and see if they wanted it because they might have already been under contract with another house. So we requested that an appraisal be done first and the agent says, “Well, that’s not normally done,” and we always get that, we always get those questions saying, “Well, that’s not normally how it’s being done or how it’s done,” and that’s right because agents traditionally are very cookie-cutter. They say, “Well, this comes first, this comes second, this comes third.” It’s not the way we do business. We do it based on the situation and that’s the way it should be done but it’s not done. I’ll be point-blank about that. Everybody wants the simple A comes first, then B, then C. That’s not the way we do things. One of the things that we do look at is the situation, and most agents do not and most individuals do not. It’s very in-the-box, it’s the way it’s done. We don’t believe staying in the box, we are always out-of-the-box.

So as a result of that, we expected the appraisal probably to be around $520,000, maybe $525,000. We had the appraisal done and they said with preliminary numbers, it was going to be $10,000-$15,000 below what the contract price was of $535,000. So we knew it was going to be in there, so we said, okay, no problem with that, that’s what we expected. Would’ve been a big difference if it was, instead of $520,000, $525,000, it was $500,000, so you never know what the appraiser, how they’re going to look at it even though you would expect certain things, doesn’t always happen that way, so we are always apprehensive. They came back with that and they said, “Okay, we want to do the inspection.” When the inspection came back, and then there was, again, those minor issues that we expected and we saw. Then, when we negotiated before they came back with a counter offer, I was talking to my staff and I said, “I knew that we would get listing price, they would reduce it to listing price.” I said, “Mark my words on that.” They’re not going to do below listing because there is a difference with the appraisal, said, but we would do list price on this and the reason for that is, which I felt is that again, we are influencing behavior, so we influenced the behavior of the agent. Now, I don’t know that for sure but coincidentally, what they did is they reduced it to the fullest price and then what they did is instead of doing any of the repairs which is traditionally what’s done, they said, we just want $2500 back, and I could’ve done one of two things. We could’ve said, and I was thinking about it but I would not do it, is I said that we would reduce the price by $3000. In the end, what would happen is that the agent would not get the bonus which is $2000 and we would also have an additional $1000, so in the end, we would make out better because we wouldn’t be paying the $2500, or our difference would’ve been $3000 as opposed to $4500 which was the $2500 for the givebacks as well as the $2000 bonus, but we don’t play that way. The agent has done a good job, so we accepted the offer as is, we just adjusted the price. It was the giveback was from $2500 to $2000. I think we are just waiting on it, but we are fine with that, and it just makes life easier for us, we don’t have to send anyone in to do any of the fixing and some of those things that are associated with it. It just makes life easier. Even though it would probably cost less money for us in the end, it’s just simple and cleaner, and they get the money and then they could do whatever they want with it when they purchased the house, and we will just give them a check for $2500, so it makes it very simple.

But again, what we did is we influenced the behavior and we got really what we wanted and we were very, very happy with that, and that’s a big thing, and that’s something that people miss out on and they don’t understand, and they are worried about every single dollar, but sometimes, when you spend the extra money, you get extra money in the end.

So that goes into one of the other houses we are in the process of listing for a couple. It’s their mom’s house. She has dementia, they just moved out but it’s a cute little house in Hackensack, and we did a walk-through of it, it was technically, they were calling it a three-bedroom, one bath. It’s really a two-bedroom, one bath because one of the rooms was a den, it did not have a closet, so technically, it’s not a three-bedroom. So what we did is they liked everything that we said to them. They liked our integrity and what we stand for, and we put them under contract. One of the things that they also liked is that I’m getting one of our crews to go in there for one day and install a closet, and they will frame it, put it up, and paint the room after it’s all done because it was this bright pink or a light pink, and we are not going to be able to match that because it’s about 20 years old, the paint on it, so we are never going to be able to match it no matter what because it’s just faded a little bit. So we are going to paint it, the room, it is going to be cute, it looks nice, and will be able to garner more money for the seller because of that, and I have my crew, they’ll go in, knock it out in a day. It would probably be over two days but it’s about, by the time everything dries and they have to come back, sand it, so on and so forth, but basically, they will be in and they will get a higher price for it. The house is very dated but it’s a cute house, it’s clean, and it’s just a nice house but it’s very outdated, but I think they’re going to get a solid offer for it. It’s in Hackensack; Bergen County has been very, very hot and I don’t know if they’re going to get multiple bids and a pricing war, so on and so forth. Everybody’s just thinking that every house that is put on the market, there is a pricing war – well, there isn’t and as more houses go on the market, it’s going to be less and less competitive, so that is a fact, and more and more houses are going on the market, so I’m always telling everyone to seize the opportunity when you could. The gravy train is not going to always be around and I continue to say that and push it, and say it on these broadcasts about it. We don’t know where the market is going or where anything is going next year.

When I was interviewed for the Commercial Real Estate, that’s one of the things we talked about, I am bearish on the economy. There are certain parts that are strong and they will continue to be strong. Those companies like Amazon, they are very strong, and they will continue to be strong. There probably will be a pullback that’s associated with that but that’s definitely the case, and that’s just the way it is. There will be a pullback. You can’t continue to just go up on the stock market and it never comes back and retraces. That’s what they call it is retrace or correction. It depends on how severe the pullback is, but I spoke to someone, it was about a month ago, two months ago, and their belief is just the stock market will continue to always go up and that’s not the case, that’s very naïve or ignorant. It doesn’t happen that way. It’s just like real estate. Real estate is not going to crater and it’s not going to be like it was in 2008, but there probably will be an adjustment, a correction with that, and with prices. That’s just the way it’s done. For anyone to always think everything’s going up and home price will always go up, that is not the case. There will be a correction, and then again, it will go back up. The issue is, how deep of a correction there is for anything, whether it’s the stock market or housing, but I do feel that it will happen and I continue to preach on that, and I’ve probably preached on it for a very long period of time. We are in the biggest longest bull market there is, so at some point, the bull has got to rest and take a little snooze before it goes forward again. That’s one of the things we have to look at.

I’d like to close out everything, thank you very much. Again, you could reach us at 973-240-8593, or templarcashforhouses.com. Have a great weekend, take care, peace, and God bless, thanks.

The preceding program was paid for by Templar Real Estate. The views and opinions expressed are not necessarily those of the staff and management of W! . As always, it is advisable to consult a professional before making a major decision.

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